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addition, petitioners resided in, encumbered, and sold real
property they transferred to the trusts. Respondent’s
determinations are not arbitrary or erroneous and are entitled to
a presumption of correctness.
Petitioners diverted income from their businesses to several
trusts. These payments are ineffective assignments of income.
Thus, the diverted income is taxable to petitioners. See Lucas
v. Earl, 281 U.S. 111, 114-115 (1930); Finley v. Commissioner, 27
T.C. 413 (1956), affd. 255 F.2d 128 (10th Cir. 1958). In
addition, petitioners did not contest any of respondent’s
determinations (i.e., income determination, liability for self-
employment tax, and liability for a section 6651 addition to tax
and section 6662 penalty). Accordingly, these determinations are
sustained. Welch v. Helvering, 290 U.S. 111, 115 (1933); Kasey
v. Commissioner, 33 T.C. 656, 660 (1960).
Petitioners instituted these proceedings primarily for
delay, repeatedly advanced frivolous and groundless arguments,
and failed to comply with orders of this Court or cooperate with
respondent. Despite this Court’s warnings, Mr. Combs
persistently asserted frivolous constitutional arguments. We,
therefore, impose a $25,000 section 6673(a)(1) penalty.
Contentions we have not addressed are moot, irrelevant, or
meritless.
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